Reference no: EM132318504

Question

1) Georgia owns a home in Colorado that she rents for $1,200 per month (she does not use the home personally). While she was in Europe in November, the roof in her rental home leaked and her tenant repaired it for $900. For the following month's rent (December), her tenant paid her $300 for rent ($1,200 - $900). What amounts should Georgia include for rental income and repair expense, respectively, for December?

A) $900; $300

B) $1,200; $900

C) $1,200; $300

D) $300; $900

2) Naomi and Matt received the following amounts from a tenant who is renting their condominium during the current year (rent is $1,500 per month):

2 months rent

$2,200

Deposit

1,600

3) Rent for two months would normally have been $3,000, but the tenant paid $800 for a plumbing repair. The repair would normally have been paid by Naomi and Matt but the problem occurred while they were out of town. How much should Naomi and Matt report as rental income for the current tax year?

A) $2,200

B) $2,400

C) $3,000

D) $4,600

4) Which of the following is not considered an ordinary expense for a rental activity?

A) Advertising

B) Insurance

C) Property taxes

D) All of these are deductible as ordinary expense rental property.

5) Which of the following is not considered a capital improvement for a rental activity?

A) Addition of a bathroom

B) Replacement of the roof

C) Repair of a leaky water pipe

D) New landscaping

6) What is the proper tax treatment of capital improvements for a residential or commercial rental property?

A) IRC section 179 may be claimed.

B) Can be deducted as ordinary expenses.

C) Must be depreciated using the double-declining balance method.

D) Must be depreciated using straight-line over 27-1/2 or 39 years.